Impact of Drought

It is difficult to separate the impacts of the drought, the recent downturn in horticultural commodities and water trade although a few reports tackle these issues.

The 'Economic and Social Impacts of Water Trading' report (RIRDC, 2007) highlights that the drought has added to the impetus for farmers to sell their water right and get out of farming. http://www.rirdc.gov.au/reports/RPLS/07-121sum.html

Impact on Mildura, Merbein, Red Cliffs and Robinvale irrigation districts

With reduced water allocations , local irrigators have been forced to review their operations and have adopted a mix of three management strategies;

• 'turn off' water to some or all crop plantings and trade some or all of their water, permanently or temporarily.
• Where plantings are irrigated, some are given minimal water i.e. enough water for plant survival but not cropping and others are given enough water to produce a crop this season.
• In some instances all of the water has been traded off farm and whole properties abandoned.

Work by Mildura Rural City Council suggests that of greater concern has been the downturn in the region's four major horticultural commodities. It is predicted that the operations that will survive the downturn will be properties of 15 hectares or less (74 per cent of the businesses and 23 per cent of the area) because most operators have access to off-farm income and those of 50 hectares or more (6 per cent of the businesses and 52 per cent of the area) because they have economies of scale and access to capital. It was thought that farms of 15 to 50 hectares (20 per cent of the businesses and 24 per cent of the area) will experience difficulty because there is less access to off-farm income and there are fewer efficiencies of scale. http://www.rirdc.gov.au/reports/RPLS/07-121sum.html

The 2007-2008 'Drought Impact; Crops 'Not Irrigated' in the Pumped Irrigation Districts of North Western Victoria' report commissioned by the MCMA also concludes that the current drought is having a dramatic effect on irrigation in the Sunraysia region. It tries to distinguish between areas not irrigated due to the drought and low water availability (drought impact) and crops that were not irrigated in since 2006 or earlier. The latter were considered as 'more a result of the low economic returns experienced by growers prior to the drought' due to low prices and oversupply.

The report used a mix of satellite imagery and crop mapping and concluded that across the irrigation districts of Mildura (FMIT), Robinvale, Red Cliffs and Merbein the overall percentage of land 'turned off' (as of December 2007) was 20% (3,259ha), with 8% due to economic impact and a further 12% due to drought.

Grapevines made up 51% (1662ha) of the land 'turned off' due to drought impact with 769ha of that being dried fruit.

Fifty-one per cent of the land 'turned off' (1,666 ha) had been irrigated using furrow irrigation. Other information included was that;

• 786 properties (43%) have more than 10% of their irrigable area not being irrigated
• 511 properties (28%) have more than 50% of their irrigable area not being irrigated.

These properties have an average property size less than the overall average property size.

Impact on diverters

The 'accumulated financial pressures of drought" have resulted in a surge of water sales out of gravity districts within Goulburn-Murray Water's (G-MW) supply area in the last few years, with four out of G-MW's six areas reaching or almost reaching the 2% limit on permanent water transfer out of a district. This has supplied much of the water for large scale green field developments downstream of Nyah. http://www.rirdc.gov.au/reports/RPLS/07-121sum.html

Likewise the drought and ongoing water scarcity has provided the opportunity for Sunraysia diverters to temporarily sell water they do no need for young plantings. As tree crops mature there will be less and less temporary trade out of the area. This could have a big impact on the areas that are losing water allocations but being offset by temporary trade back in. For example, if another drought on the Goulburn there won't be any water from the MIS schemes to help them out, they'll all be used by the mature crops.

Impact of drought on river towns

A project commissioned by the Murray Group of Councils (Mildura, Swan Hill, Gannawarra, Loddon, Campaspe and Moira) is underway. It aims "To analyse the economies of the Murray Group of Councils and prepare a business case to recommend assistance measures for non-farm businesses'. This is a $150,000 project to assess the impact of drought, especially the flow-on effects to non-farm businesses.

A first draft will be available on our website but not included in this report due to the range of uncertainties in the current information.